Wednesday, March 10, 2010

Seeking the truth over oil royalty issue

The oil royalty issue ranks top of the list in the 'political vocabulary' of the people in Kelantan, and since it came to light last year, it is has been much talked about in coffee shops and in cyber space.

The Kelantan state legislative assembly sitting held last March passed a motion to bring the issue over the state's petroleum royalty to the court as it was claimed that the issue involves billions of ringgit that belongs to people in this east coast state.

Ironically, the motion received the backing from the opposition Barisan Nasional assemblymen.

It is a well known fact that PAS has been using the oil royalty issue before the Manik Urai by-election last July, using the issue as a tool for 'vote-lobbying' by accusing the BN assemblymen as not fighting for the cause.

Many billboards were erected particularly along Jalan Kuala Krai-Gua Musang, to create a sentiment that alleged the Federal Government as marginalising the Kelantan people.

Does the allegation carry water or is it a mere political gambit?

Seeking the truth

For Pasir Mas Member of Parliament Datuk Ibrahim Ali, the debate on the issue should be immediately stopped saying that the ensuing polemics did not bring any benefit to the people. Instead it created a lot of confusion.

The Independent MP said whether the term 'oil royalty' or 'compassionate payment' is used, it is mere terminology but the more important aspect is that the RM20 million that will be paid out by the federal government to the people of Kelantan need to be well utilised.

"If the state government delays in bringing the matter to court, then I have no choice but to do it myself. This is to seek out the truth and to stop the polemics," he said.

The Kelantan government is steadfast in demanding for RM2 billion (demand made last year) from the federal government for petroleum exploration works off the state's coast but under the law the state has no right to the claim.

The two oil wells in question are located 150 nautical miles from the Kelantan shores. Under Section 4 (2) of the Emergency (Essential Powers) Ordinance 1969, a state's waters is defined as only within three nautical miles from its shores.

According to Article 3 of the United Nations Convention On The Law Of The Sea (UNCLOS), the breadth of Malaysian territorial sea is not more than 12 nautical miles from its shores and Article 57 of the same convention spells out that 200 nautical miles from a country's shoreline is its Exclusive Economic Zone (EEZ).

The zone in question is located on the 'overlapping' Continental Shelf at the Gulf of Thailand and South China Sea jointly developed with Thailand since 1979.

Waste of resources

Political analyst Dr Sivamurugan Pandian said bringing the issue to court is not the best avenue to resolve the matter. Instead it will be time consuming and wastage of financial resources.

"Does political interest takes the priority over others?" he asked.

There is truth in Sivamurugan's statement as the court process is expected to drag on until the next general election and this issue is expected to be turned into a political 'battle'.

Sivamurugan does not discount the possibility that PAS, which has been in control of Kelantan since 1990, will play the oil royalty issue as it appears that there are no other issues which are closer to the heart of the Kelantan folks apart from the oil royalty issue.

Based on current development, PAS appears to be adamant over its demands, making the Petroleum Development Act 1974 (Act 144) as its main argument point.

The Kelantan PAS government is demanding that the federal government pays five percent of the oil royalty based on the agreement signed between Petronas and the state government in 1975.

However the federal government has made it clear that the state is not eligible for the royalty based on provisions in Act 144, Emergency (Essential Powers) Ordinance 1969, Continental Shelf Act 1966 and others as provided in the Federal Constitution.

Eligible or otherwise?

However after taking into account the interest of the Kelantan people, the federal government will still issue RM20 million in compassionate payment which is also five per cent from production at the gas field located at South Earth Platform known as Block PM301 located near the state's waters.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the amount was from the gas production there since May 2008.

There is no production yet from Block PM302.

However the issue, on the verge of being taken to court, had taken another twist much earlier when in December 2009, Opposition Leader Datuk Seri Anwar Ibrahim had moved a motion for Act 144 to be amended. This should be studied closely including by all Kelantan-born who are abroad.

The motion was for the state's territorial waters to be extended right up to the 200 nautical miles. Does this indicate that the opposition parties including PAS has acknowledged that the state is not entitled to the oil royalty?

The fact is that when each of 'two sides of the coin' is studied closely, then the people of Kelantan will know whether it is true that the federal government has marginalised people in this east coast state.

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About Me

Mohd Kamal Abdullah frequently writes in Malaysiakini, MalaysiaToday and in the FORUM column of MALAYSIA CHAT www.malaysia-chat.com. Kamal holds a law degree and was active in Malaysian Politics (a component party of Barisan Nasional) until of late, to concentrate on pursuing a post-graduate law degree in United Kingdom.